How rental prices are changing
Changes in the first quarter of 2021
We are now a year on from the first UK wide coronavirus lockdown and property prices continue to be a hotly debated topic. When the pandemic first struck, there were countless predictions about impending carnage in the housing market. Predictions that have failed to happen.
Much talk of property values centres around purchase prices. However, one in five households rent their home and rental prices are often left out. Let's take a look at how rents have changed during the first quarter of 2021 as the UK prepares for freedom from lockdowns.
To understand rental prices we need to consider supply, or the number of properties available. This has increased significantly for flats and remained largely static for houses. The biggest increase is in the number of 4 bed flats available to rent across the country, up 17% from 15,000 to 17,500. There is also a 7% increase in studio flats with 3% increase for both 1 bed and 2 bed flats. When it comes to houses, overall the number available has remained stable albeit with an increase of 5% in 1 bed houses and a decrease of 3% in 4 bed houses.
Although we are guessing, it is our belief that the increase is partly due to landlords letting out former Furnished Holiday Lets and Serviced Accommodation as these were hit hard by recent travel restrictions. Lets Delight consciously decided not to make this transition with Lets†Stay, our Furnished Holiday Let brand. Instead, we are looking forward to a surge of staycation bookings as travel restriction are lifted.
Most people seem to believe that there has been a sharp increase in rental prices. However - for both flats and houses - we found this not to be the case. Generally, prices rose by just 2%, which equates to between £5 and £20 per month with only 2 bed houses increasing by the full £20. 3 bed flats decreased 3% or £20 per month, reflecting the much greater supply. At the top end of the market, 4 bed houses decreased 1% from an average £1080 to £1065.
There is another important part of the rental market where the situation is very different which is multi-lets, where people rent just one room in a shared house. Lets Delight operate a number of Shared Living Projects for young people typically freshly out of college or university, therefore, this part of the market is very important to us, as it is for anyone looking at shared living.
Like with flats and houses, there was an increase in supply of multi-lets, but here it was a massive 46% increase from 17,500 rooms available across the country to 25,500. That's a big increase which reflects people's confidence in moving as the country transitions away from lockdown. This is reinforced by a 16% increase in the number of people looking for rooms. However, unlike for houses, the increased supply has not created lower prices, with the average price of a room being up 48% during the quarter from just £250 per month to £370.
Despite the significant increase in the cost of shared living and smaller increase in flat and house rentals, Lets Delight have not increased rents for existing tenants for 3 years. We make a decision around Christmas time each year and notify tenants during January with any price changes taking effect in April. Over Christmas 2020 we took the view that tenants had had enough to deal with thanks to COVID-19 and had all continued to pay rent despite some needing to deal with challenging personal circumstances. Therefore, there will be no rent increases for existing tenants in 2021 either.
The data for this article has come from Lets Delight's property pricing system, PropTools. To find out specific prices for properties in your area, or any UK postal area, sign up for a free PropTools account.